Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
Upside of Inequality Oxford Unintended Consequences
Econ Summary Highlights Debate

Friday, September 11, 2026

AI Summary. The share of AI queries requiring top-tier proprietary models has fallen from 60% to 25%, as open-weight models handle a growing proportion of tasks at lower cost.

Toby Nangle Financial Times
Date Posted:

Data on OpenRouter, an AI query triage service, show that at the start of the year, the share of queries routed to a closed-weight proprietary model was 60%. That share has declined to 24% as open-weight performance has improved relative to frontier models.

Are open-source models eroding the competitive moat of proprietary AI?

Core argument: OpenRouter data show closed-weight proprietary models’ share of routed queries collapsed from 60% to 25% in 2025, indicating open models now handle three-quarters of real-world AI traffic.

One way to see which way the wind is blowing on open-model versus closed-model usage is by looking at data from router firms like OpenRouter, the New York start-up that Stripe agreed to buy last month. AI routers work a bit like an AI query triage service with a toll booth strapped on. Clients rock up, basically model-indifferent, and rather than tie themselves to any given model, they just send their queries to the router, which then flips them on to the lowest-cost model that will produce a good enough response for whatever the task at hand. Asking really tough closed-end frontier-model-worthy questions? To a frontier model they go. Increasingly, the share of queries that are truly closed-weight frontier-model-worthy is declining.

Takeaways by Macro Roundup® AI

  1. OpenRouter data show closed-weight proprietary models’ share of routed queries collapsed from 60% to 25% in 2025, indicating open models now handle three-quarters of real-world AI traffic.
  2. AI routers structurally disadvantage hyperscalers by directing queries to the cheapest adequate model, reserving closed-weight frontier offerings only for tasks that demonstrably require them.

Related Articles:

  • The AI Price Wars and Their Consequences — AI model pricing is converging toward commodity levels, where an 80% annual price decline requires 400% unit growth just to maintain flat revenue. Ceding lower-tier markets to defend premium pricing has historically failed against low-cost competitors, making trillion-dollar valuations difficult to sustain alongside heavy capital spending.
  • OpenAI and Anthropic In Price War as Chinese AI Rivals Gain Ground — AI model pricing is falling as competition intensifies, with leading models cutting token costs by up to 80%. Higher-priced models can deliver lower total costs by completing tasks in fewer tokens or attempts.
  • The AI Trade Is Losing One of Its Key Signals — AI token prices have fallen over 90% while total spending has roughly doubled, expanding the market overall. However, a 46% gap between AI investment and actual sales — wider than the 32% divergence seen during the 2001 telecom collapse — raises the risk that current infrastructure spending is outpacing real

AI Summary. A benchmark designed to measure fluid reasoning rather than memorized knowledge — where earlier AI models scored near zero — has been solved at human-level performance by a new AI system. The benchmark's creator now expects true artificial general intelligence to arrive before 2030.

Michael Cembalest J.P. Morgan
Date Posted:

Newly released Chat GPT-6 scored 62% on Francoise Chollet’s fluid human intelligence test when undirected by humans and 99% when directed.

Does solving one reasoning benchmark mean artificial general intelligence is near?

In 2019, Francois Chollet created the ARC-AGI, an exam designed to show the gulf between AI model memorized answers and the fluid intelligence that people have. The exam assesses the ability to quickly acquire skills and solve unfamiliar problems from first principles, rather than just memorizing enormous amounts of training data and regurgitating information. GPT3 scored a zero on ARC-AGI-1 (humans score 60%-70%), and OpenAI o1 scored just 3% on ARC-AGI-2. In March 2026, Chollet and the ARC Prize Foundation released ARC-AGI-3, a harder set of problems that shifted from static to dynamic interactive video challenges. GPT-6 Astra scored 62% with a standard harness and 99% with a Provider Adapter harness (which uses OpenAI’s context management features to preserve and reuse the model’s reasoning between interactions).

Related Articles:

  • The AI Re-Acceleration That Wasn’t — 615). Claims of re-acceleration result from cherry-picking frontier observations, selecting a breakpoint, ignoring variance collapse, and fitting separate lines on either side.
  • Why .400 Hitters Disappeared — and What It Means for AI — As AI model performance converges toward a ceiling, relative gains per improvement cycle shrink, transforming frontier capability from a pricing moat into a commodity where price becomes the primary differentiator and margin pressure intensifies across leading providers.
  • Chart of the Day: Small Models are Closing the Gap to Frontier AI — Small AI models are closing the gap with large ones, achieving the same reasoning benchmarks with 142x fewer parameters than required two years ago. This makes on-device AI viable without data centers, compressing the economic case for cloud-based, per-query AI services.

AI Summary. U.S. diesel prices have reached a record $6.06 per gallon, surpassing the previous record of $5.82 set after Russia's invasion of Ukraine. Diesel's central role in freight, agriculture, and food transport is feeding producer price inflation at a critical harvest season, squeezing farm margins on fuel and fertilizer costs.

Stephanie Findlay and Jamie Smyth Financial Times
Date Posted:

US retail diesel prices have climbed to an all-time nominal high of $6.06 per gallon. The previous nominal high in January 2022 would be $6.54 in current dollars.

Does diesel supply shock threaten farm profitability during harvest season?

Core argument: U.S. diesel prices hit a record $6.06/gallon, surpassing the prior peak of $5.82 set after Russia’s 2022 Ukraine invasion, as an Iran-driven supply shock tightens global fuel markets.

The diesel pump price has surged this year and rose to $6.06 on Friday, motorist group AAA said, above the previous record high of $5.82 in 2022 following Russia’s full-scale invasion of Ukraine. Diesel’s critical role in the transport supply chain is also feeding into surging producer prices, which can stoke inflationary pressures at a time when Americans increasingly feel squeezed by affordability. The jump in diesel comes ahead of the autumn high season, where the fuel is used to power agricultural equipment to harvest and transport crops. Grain farmers in America’s Corn Belt have said they are facing a crisis with rising fuel and fertiliser prices eating into profits.

Takeaways by Macro Roundup® AI

  1. U.S. diesel prices hit a record $6.06/gallon, surpassing the prior peak of $5.82 set after Russia’s 2022 Ukraine invasion, as an Iran-driven supply shock tightens global fuel markets.
  2. Diesel’s central role in freight and logistics transmits the price surge directly into producer prices, amplifying inflationary pressure on an already cost-squeezed American consumer.
  3. The price spike arrives ahead of the autumn harvest season, compounding input-cost pressure on Corn Belt grain farmers already facing a profit squeeze from elevated fuel and fertilizer costs.

Related Articles:

  • US Diesel Prices Soar To Record High — U.S. diesel prices have reached a record $5.85 per gallon, surpassing the previous record set after Russia's invasion of Ukraine. Prices face further upward pressure from harvest season demand, early winter heating needs, and planned refinery maintenance, with transportation and agriculture accounting for the majority of diesel consumption.
  • U.S. Economy Less Vulnerable To Geopolitical Oil Price Shocks Than In The Past — Kilian, et al find that the impact of an energy shock on US real GDP growth has fallen to 1/20th of what it would have been in 1980, due both to the declining…
  • Fighting Words: The Energy Transition in 2026 — As measured by useful final energy consumption in 2024, nuclear provided 6% of America’s 44.5 exajoules, renewables 9%, and fossil fuels 85%. The corresponding…

AI Summary. Persistent inflation has raised the implied probability of a Federal Reserve rate increase to ~90%, up from ~70%. Rising oil prices above $99/barrel add further upward pressure on inflation, complicating the rate decision.

Justin Lahart and Matt Grossman Wall Street Journal
Date Posted:

The implied likelihood of a September rate hike increased from 70% to 85% because the rate of inflation didn’t decline in August, headline and core CPI are 3.4% and 2.4% y/y, respectively.

Does persistent inflation force the Fed to raise rates sooner?

Core argument: A firm August inflation reading lifted Fed rate-hike odds to ~90% from ~70%, with three July dissenters already on record favoring tighter policy and others signaling they would join them.

The August inflation reading has big implications for a Fed that has been sharply divided over whether it should raise rates at its policy-setting meeting next week. At the Fed’s last meeting, in July, three officials dissented in favor of raising rates, and others have since said they could join them if inflation doesn’t improve. Interest-rate futures imply there is now about a 85% chance that the central bank will increase its target range on overnight rates by a quarter point. Prior to the report, the chances were about 70%. Further complicating the Fed decision, oil prices have surged this month, with crude lately fetching over $99 a barrel in Friday New York trading, versus $85.76 at the end of August.

Takeaways by Macro Roundup® AI

  1. A firm August inflation reading lifted Fed rate-hike odds to ~90% from ~70%, with three July dissenters already on record favoring tighter policy and others signaling they would join them.
  2. Crude oil’s surge past $99/barrel from $85.76 at end-August adds a fresh inflationary impulse that complicates the Fed’s rate decision by threatening to entrench elevated price pressures.

Related Articles:

  • Global Views: They’re Not Hiking — The decline in unemployment has been driven by lower labor force participation, not an increase in employment. Hatzius stresses continued weakness in wage…
  • Home Alone: Inflation And The New Fed Chair — Current inflation conditions — including labor market tightness, price pressures, supply chain stress, and the output gap — align more closely with historical conditions that prompted the Federal Reserve to raise rates than to cut them. Averaging multiple monetary policy benchmarks points to an optimal interest rate range of 4.00%–4.85%
  • Do Voters Punish Inflation or Pay Cuts? Inflation and Real Wages in U.S. Elections — Given state fixed effects, demographics, and local inflation, a county whose real wage loss was 1SD > that of the mean county shifted its Presidential vote…

Robin Brooks Robin Brooks Substack
Date Posted:

Brooks argues rising yields in advanced economies this year are driven by market’s “high alert” regarding debt. The highest cumulative rise in yields this year is in high-debt countries, and yields have risen on days with debt-related bad news.

Markets are on high alert, which they wouldn’t be if they weren’t worried about debt. Markets are aggressively differentiating between high- and low-debt countries as global yields rise. The lowest cumulative rise in yields this year (relative to a global average) is in Switzerland, Norway, Sweden, New Zealand and Australia. High-frequency price action tells us exactly what markets think and they’re clearly agitated about deficits and debt. When Japan’s Takaichi said in January that she was done with “excessive” fiscal austerity, long-term yields spiked sharply. In fact, that spike was so big that it caused global contagion, with the NY Fed doing its infamous “rate check” a few days later to keep the Yen from collapsing. Then there's the US Treasury's surprise buyback announcement on August 19, which tanked the Dollar as precious metals rose.

Related Articles:

  • Global Debt Report 2026 — Across the OECD last year, $13.5T of governmental debt needed refinancing, 70% ($9.5T) of which was US debt, up from 57% in 2020. The US and Japan were…
  • The Coming Great Repression? — Higher public debt is historically associated with lower, not higher, government bond returns, as financial repression forces banks to hold low-yield bonds and cheap reserves, suppressing borrowing costs. This mechanism reduced British public debt by ~91% of GDP in 1945–55, dwarfing the contributions from inflation or budget surpluses.
  • Rising Bond Yields Are Good, Actually — Higher interest rates remain low relative to nominal income and spending growth of ~7% annually, making current rate levels benign rather than restrictive. Elevated rates help reallocate spending away from consumption and housing toward productive investment, or attract foreign capital to fund that shift.

Nat Malkus and Sam Hollon American Enterprise Institute
Date Posted:

A large sample of Indiana high school students shows a near-linear relationship between 8th grade math test scores and participation in varsity athletics. Academic success and participation in extracurriculars appear to be complementary.

We find large gaps in varsity sports participation by academic achievement, which we measure using students’ eighth-grade math test scores. Students who attended the smallest schools (first quintile) were 2.8 times as likely to participate in varsity sports as those who attended the largest schools (fifth quintile). We find that after adjusting for school size 35% of students in the top achievement quintile played varsity sports in 2025, compared with just 12% of students in the bottom quintile. In general, the relationship between achievement quintiles and varsity sports participation was remarkably linear. [The exception was football], the largest sport by participation [17% of all varsity athletes and overwhelmingly male]. Here the top quintile [in 8th grade math] had 20% lower odds of playing than students in the middle achievement quintile.

Related Articles:

Thursday, September 10, 2026

AI Summary. Firms' wage-setting norms are sticky, rising only from 2.7% to 3.5% even as inflation peaked near 7%, causing real wages for workers who stayed in their jobs to fall systematically. By the time inflation subsided, the median firm's wage rule had converged to ~3%, roughly matching inflation.

Erik Hurst, Christina Patterson, Nela Richardson, and Ye Liv Wang University of Chicago
Date Posted:
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ADP microdata from 2016–25 suggest firms set wages according to “wage norms” ~ invariant to inflation. The 2020–21 inflation surge mechanically reduced real wages. By the end of 2025, 34% of incumbent workers’ real wages were lower than in 2020.

Do sticky wage norms systematically reduce real wages during inflation spikes?

Core argument: Firm-level modal wage rules peaked at 3.5% in 2022–2023 against roughly 7% inflation, meaning nominal rigidity systematically eroded real wages for job stayers throughout the inflationary episode.

Roughly 42% of all nominal wage increases below 6% were within 0.01 percentage points of a whole or half number [Figure 6]. Figure 9 plots the employment-weighted average modal wage change across firms (solid line) alongside inflation rate (dashed line) from 2016 through 2025. In the pre-pandemic period, firm-level wage rules were relatively stable at a median of 2.7%, modestly above the rate of inflation. Beginning in 2021, inflation rose sharply, peaking at approximately seven percent in 2022. The average modal wage change also rose, reaching a peak of 3.5% in 2022 and 2023. By 2025, the median firm had a wage rule granting increases of three percent, roughly in line with inflation. The stickiness of firms’ wage rules in the face of inflationary pressure contributed to the systematic fall in real wages for job stayers. Evidence from Belgium [which has strong wage indexation], suggests that declining real wages, rather than inflation itself, helps explain the persistence of depressed consumer sentiment during the 2021–2024 period.

Takeaways by Macro Roundup® AI

  1. Firm-level modal wage rules peaked at 3.5% in 2022–2023 against roughly 7% inflation, meaning nominal rigidity systematically eroded real wages for job stayers throughout the inflationary episode.
  2. The median firm’s modal wage increase converged to 3% by 2025—matching inflation rather than exceeding it—marking a reversal from the pre-pandemic norm of 2.7% modestly above price growth.

Related Articles:

AI Summary. Prime-age (25–54) and older (55–64) employment rates in Europe exceed those in the U.S., disproving the claim that European welfare systems suppress work. Higher-welfare northern European countries tend to have higher employment rates than lower-welfare southern ones.

Chris Giles Financial Times
Date Posted:
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Despite Europe’s high social spending relative to the US, Chris Giles notes that prime-age adult (25–54) labor force participation in the Eurozone has overtaken that of the US, and there has been a dramatic convergence in the LFP of older workers.

Does European welfare actually discourage work?

Core argument: Prime-age adults (25–54) and older workers (55–64) both achieve higher employment rates in Europe than in the U.S., refuting the premise that generous welfare systems suppress labor force participation.

It does not matter whether you use EU or Eurozone data, prime-age adults (between 25 and 54) in Europe are more likely to be in work than those in the US. Older people (between 55 and 64) also have higher employment rates in Europe. Younger people (between 15 and 24) are more likely to have a job in the US, but that results from Europeans educating themselves for longer. The proportion of young people not in education, employment or training is higher in the US than in Europe. So welfare is not stopping work. More than that, the higher-welfare north of Europe tends to have higher employment rates than the south, although there is convergence within the Eurozone. Spain, in particular, has enjoyed rapid improvements.

Takeaways by Macro Roundup® AI

  1. Prime-age adults (25–54) and older workers (55–64) both achieve higher employment rates in Europe than in the U.S., refuting the premise that generous welfare systems suppress labor force participation.
  2. The U.S. records a higher share of young people (15–24) not in education, employment, or training than Europe, indicating that lower U.S. youth employment reflects weaker human capital investment, not stronger labor markets.
  3. Within Europe, higher-welfare northern economies consistently outperform lower-welfare southern ones on employment rates, though intra-Eurozone convergence is underway, led by rapid gains in Spain.

Related Articles:

AI Summary. U.S. Treasury yields have surged to multi-decade highs across maturities, with the 30-year yield reaching levels not seen since 2007 and the 10-year approaching 5%. Rising oil prices are driving inflation expectations, pushing markets to price in near-certain Federal Reserve rate hikes within months.

Elizabeth Stanton Bloomberg
Date Posted:

The 10-year Treasury yield rose 9bp to 4.92%, and the 30-year rose to ~5.35%. The increase in yields stoked demand at today’s 30-year auction, which cleared at 5.308%.

Are higher oil prices forcing the Fed to abandon its rate-cut plans?

Core argument: The 30-year Treasury yield reached its highest level since 2007 and the 10-year hit 4.93%, its highest since November 2023, as an oil-driven inflation surge pushed traders to price a Fed rate hike at 70% odds for next week.

Yields on US government debt rose to fresh multiyear highs — stoking demand for an auction of 30-year bonds. Treasury yields rose by five to 12 basis points across maturities, with the 30-year benchmark reaching levels last seen in 2007. The selloff lured investors to a $22 billion auction of 30-year bonds, which drew historically strong demand. The new securities were awarded at 5.308%, nearly three basis points lower than their yield in pre-auction trading just before the bidding deadline, meaning that bidders at higher yield levels missed out. Investor demand was so strong that a record low 2.2% of the sale went to Wall Street dealers. The auction’s 5.308% result was 2.7 basis points lower than the market level going in, the second-biggest negative gap on record in the past five years.

Takeaways by Macro Roundup® AI

  1. The 30-year Treasury yield reached its highest level since 2007 and the 10-year hit 4.93%, its highest since November 2023, as an oil-driven inflation surge pushed traders to price a Fed rate hike at 70% odds for next week.
  2. The $22 billion 30-year bond reopening carried an indicated yield of ~5.35%, exceeding every 30-year auction result back to 2001 and signaling a structural repricing of long-duration U.S. sovereign risk.
  3. The two-year note yield surpassed 4.5% for the first time since 2024, with markets fully pricing a Fed hike by October rather than December, compressing the expected tightening timeline by two months.

Related Articles:

  • The Budget and Economic Outlook: 2026 to 2036 — CBO projects a deficit of 5.8% of GDP in 2026, unchanged from 2025. Outlays, at 23.3% of GDP, will exceed their 50-year mean by 2.1pp; revenue of 17.5% is just…
  • America’s Risky Debt: What Markets See That Policymakers Don’t — The safety premium that investors historically paid for US government bonds over equivalent alternatives has compressed toward zero and, at longer maturities, reversed — with global investors now pricing foreign government bonds as safer than US Treasurys.
  • How Might Fiscal Policy Respond to the Rise of Artificial Intelligence? — A 0.5% annual productivity growth boost would reduce publicly held federal debt by 39% of GDP over 30 years, cutting roughly half of the projected rise from 101% to 175% of GDP, through higher tax revenue, slower spending growth relative to GDP, and debt dilution that outweighs higher borrowing costs.

AI Summary. Long-term interest rates have risen 45–79 basis points across major economies, with the AI investment boom—not fiscal or monetary policy—driving the surge in demand for capital. A comparable IT spending wave in the late 1990s coincided with even higher long-term rates despite low inflation and a budget surplus.

Paul Krugman Krugman Wonks Out
Date Posted:

Noting long-term yields have risen across advanced economies, Krugman argues increased yields over the last 6 months “may not have much to do with policy at all,” but are more likely due to “the surge in demand for funds as a result of the AI boom.”

Is artificial intelligence investment driving up global borrowing costs?

Core argument: Bruegel finds 30-year sovereign yields rose 45–79 bps across the U.S., Germany, France, Italy, the U.K., and Japan in the six months to Aug. 28, with the U.S. at 58 bps, suggesting a global demand-for-capital driver rather than U.S.-specific fiscal policy.

What [has been] driving interest rates higher [in the six months to August 28]? The European think tank Bruegel notes “US, German, French, Italian, UK, and Japanese 30-year yields [all] rose by 45-79 basis points in the six months to 28 August, with the US in the middle at 58bp.” It may not have much to do with policy at all, [but is instead due to] the surge in demand for funds as a result of the AI boom. We are in the midst of a surge in spending on IT that is on track to be even bigger than the boom of the late 1990s, [when] long-term rates were even higher then than they are now, even though inflation was low and we had a budget surplus.

Takeaways by Macro Roundup® AI

  1. Bruegel finds 30-year sovereign yields rose 45–79 bps across the U.S., Germany, France, Italy, the U.K., and Japan in the six months to Aug. 28, with the U.S. at 58 bps, suggesting a global demand-for-capital driver rather than U.S.-specific fiscal policy.

Related Articles:

  • Bessent’s Upsized Buybacks Get Hit by Treasury-Market Reality — The U.S. Treasury tripled its debt buyback program to $6bn in longer-dated securities, but markets sold off anyway, pushing 10-year yields to their highest level since 2023.
  • Rising Bond Yields Are Good, Actually — Higher interest rates remain low relative to nominal income and spending growth of ~7% annually, making current rate levels benign rather than restrictive. Elevated rates help reallocate spending away from consumption and housing toward productive investment, or attract foreign capital to fund that shift.
  • Don’t Draw The Wrong Conclusion From Treasury Yields — Rising long-term bond yields reflect higher expected short-term interest rates over the next decade, not concerns about government debt sustainability, as both inflation expectations and the risk premium for holding long-term bonds have remained stable.

AI Summary. Deep-tech investment outside AI has exceeded $150bn since early 2024, surpassing the $133bn invested across the entire prior decade. Falling valuations for traditional software companies and outsized returns from early bets on capital-intensive ventures are pushing investors toward riskier, science-driven deals.

Tim Bradshaw Financial Times
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Since the start of 2024, more than $150B of venture capital has been invested into non-AI “deep tech” firms whose products are rooted in significant engineering advances, exceeding the $133B invested in such firms btw 2010 and 2019.

Are investors abandoning software for capital-intensive science bets?

Core argument: Deep-tech investment excluding AI exceeded $150bn since early 2024, surpassing the entire $133bn deployed across the prior decade (through end-2019), as falling valuations for traditional software push venture capital toward capital-intensive scientific bets.

The AI boom is fuelling a resurgence in ambitious “moonshot” bets, as early SpaceX backers’ huge returns and falling valuations for traditional software companies force tech investors to embrace riskier and more capital-intensive dealmaking. Excluding the giant sums ploughed into AI start-ups, global investment in “deep tech” — companies whose products are rooted in big scientific or engineering advances — has exceeded $150bn since the start of 2024, more than the $133bn in the entire decade to the end of 2019, according to Dealroom. This year’s deep-tech investments have not yet surpassed 2021’s peak, which was propelled by battery and electric vehicle deals for the likes of Rivian and Northvolt — many of which turned sour, highlighting the risks involved in moonshot dealmaking.

Takeaways by Macro Roundup® AI

  1. Deep-tech investment excluding AI exceeded $150bn since early 2024, surpassing the entire $133bn deployed across the prior decade (through end-2019), as falling valuations for traditional software push venture capital toward capital-intensive scientific bets.
  2. The 2021 deep-tech peak — driven by battery and electric vehicle deals including Rivian and Northvolt — has not yet been surpassed, and the subsequent losses from those deals underscore the capital destruction risk inherent in moonshot dealmaking.

Related Articles:

  • Capital Is Making a Comeback — Btw 1985-2021 the capital intensity of the American economy was relatively flat as a rise in intangible investment was offset by a decline in tangible…
  • Public to Private Equity in the United States: A Long-Term Look — Global venture capital returns are highly skewed: 62% of deals lose money, more than half lose 50–100% of invested capital, but fat-tailed outliers drive overall returns. This pattern mirrors historical whaling voyages, where payoffs were similarly variable and driven by rare outsized outcomes.
  • Gross and Net US Investment — Net investment has fallen from ~40% of gross investment in the 1970s to ~25% today, meaning three-quarters of gross investment merely replaces depreciating assets. The shift toward faster-depreciating information technology assets requires larger gross investment increases to achieve any given gain in productive capital per worker.

Wednesday, September 9, 2026

AI Summary. The Current Population Survey systematically understates income receipt, with nearly half of measured variables showing downward bias of 40% or more when benchmarked against administrative tax and program records. Bias is modest for Social Security programs (under 15%) but exceeds 40% for pensions, unemployment insurance, and food stamps.

Bruce Meyer, Nikolas Mittag, Derek Wu, Anthony Tatarka, et al. National Bureau of Economic Research
Date Posted:

CPS reports of receipts in dollar terms are 40–60% below administrative benchmarks for income sources such as SNAP and pensions. Linked records show most of the gap comes from recipients reporting no receipt at all, not underestimating amounts.

Does survey data systematically undercount household income sources?

To directly measure bias in survey estimates, we calculate the difference between the weighted survey estimate and the survey target constructed from published totals [TSE or total survey error], using public-data adjustments for intentional coverage differences for average dollars received and the recipient share of the population across our income sources. Figures 1 and 2 summarize TSE in the CPS from 1984 to 2022, expressed as a share of the survey target for our measures of recipients (seven income sources) and dollars (eight income sources). In levels, TSE is almost always negative for both recipients and dollars (with SSI dollars an exception in recent years), indicating that survey means are systematically biased downward. For nearly half of the variables the bias is 40% or more. Yet, there is substantial heterogeneity across income sources. TSE tends to be more modest for SSA programs (specifically OASDI and OASI, for which the net bias is below 15% for recipients and dollars), while it is much larger for income sources such as pensions, UI, and SNAP (for which the net understatement exceeds 40%).

Related Articles:

AI Summary. The U.S. Treasury tripled its debt buyback program to $6bn in longer-dated securities, but markets sold off anyway, pushing 10-year yields to their highest level since 2023.

Greg Ritchie and Alex Harris Bloomberg
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The 10-year Treasury yield rose to ~4.85%, its highest level since 2023, after the Treasury announced a planned buyback of $6B, less than many market participants had expected, despite being 3x the size of the previous operation.

Does buying back more debt actually reduce market anxiety about deficits?

Core argument: The Treasury’s $6 billion buyback of 10–20-year securities — triple the $2 billion initially signaled — failed to suppress borrowing costs, with the 10-year yield rising 5 basis points to 4.83%, its highest level since 2023.

The US Treasury tripled the initial size of its next buyback of longer-dated government debt, in an announcement that was met with initial disappointment by investors. The Treasury Department said it will buy up to $6 billion of outstanding securities set to mature in the 10- to 20-year sector. It’s the first such operation under an expanded buybacks program that showcases Secretary Scott Bessent’s resolve to stem the recent rise in borrowing costs. The new figure is triple the amount initially communicated to investors of $2 billion. Treasuries extended an earlier decline after the release, with the yield on 10-year notes up about 6 basis points to 4.85% as of 11:35 a.m. in New York — their highest level since 2023.

Takeaways by Macro Roundup® AI

  1. The Treasury’s $6 billion buyback of 10–20-year securities — triple the $2 billion initially signaled — failed to suppress borrowing costs, with the 10-year yield rising 5 basis points to 4.83%, its highest level since 2023.
  2. Investor disappointment with Secretary Bessent’s expanded buyback program indicates that fiscal-trajectory concerns are outpacing the Treasury’s ability to manage long-end yields through open-market operations.

Related Articles:

  • Bessent’s Bond Gains Wiped Out as Treasury Yields Jump Again — A Treasury buyback program that briefly suppressed long-term government borrowing costs has been fully reversed by renewed global bond selling, with 30-year yields back at 5.27% and 10-year yields ~10 basis points higher than before the intervention.
  • America’s Risky Debt: What Markets See That Policymakers Don’t — The safety premium that investors historically paid for US government bonds over equivalent alternatives has compressed toward zero and, at longer maturities, reversed — with global investors now pricing foreign government bonds as safer than US Treasurys.
  • Rising Bond Yields Are Good, Actually — Higher interest rates remain low relative to nominal income and spending growth of ~7% annually, making current rate levels benign rather than restrictive. Elevated rates help reallocate spending away from consumption and housing toward productive investment, or attract foreign capital to fund that shift.

AI Summary. Japan's era as a reliable source of cheap borrowing is ending as interest rates rise, unwinding decades of low-rate financial assumptions.

John Authers Bloomberg
Date Posted:

Authers pictures Japan exiting its ultra-low rate regime that helped drive the real effective yen to ~ half its 1990 level. Higher yields should curb yen carry, raise demand for Japanese assets, and force the “world …to do without Japanese funding.”

Is Japan's cheap money era finally coming to an end?

Core argument: Japan’s decades-long role as the world’s low-cost funding source is unwinding as rising interest rates erode the carry-trade economics that made yen borrowing the default strategy across global markets.

For decades, finance has treated Japan as the exception to all rules. While the rest of the world surged and collapsed, Japan trudged on with minimal interest rates and sluggish growth — a safe place to borrow money cheap, through any number of elaborate trades. Last week’s news that Norway’s Norges Fund, one of the biggest sovereign wealth pools, was reallocating its fixed income portfolio in a way that likely shifts from Treasuries to Japanese bonds prompted speculation that more international money would move back to Tokyo and its newly competitive yields. Overnight rates are now forecast to go up by a full percentage point over the next 12 months, to 1.9%, following a shift in perception of the economy.

Takeaways by Macro Roundup® AI

  1. Japan’s decades-long role as the world’s low-cost funding source is unwinding as rising interest rates erode the carry-trade economics that made yen borrowing the default strategy across global markets.
  2. The shift in Japan’s monetary regime forces investors to reprice risk across asset classes that were structured around the assumption of perpetually near-zero Japanese rates.

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AI Summary. AI-driven data-center expansion and related professional hiring have added roughly 1.05m jobs above trend since 2022–2023, spanning electrical contracting, equipment manufacturing, software development, and data science. The job gains exceed what broader construction, manufacturing, and professional employment trends would predict.

Economist Staff The Economist
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The Economist estimates that so far the AI boom has created ~1mm new jobs in the US, exceeding their estimate of ~200,000 layoffs attributed to AI since mid-2023.

Is artificial intelligence creating a genuine employment boom or temporary hiring surge?

Core argument: AI-linked demand has generated roughly 730,000 above-trend jobs in engineering, software development, and data science since 2022, substantially outpacing near-term displacement effects.

[We] tracked five industries at the heart of the data-centre build-out, from electrical contracting to equipment manufacturing. Since 2023 employment in them has risen by roughly 320,000 more than broader construction and manufacturing trends would suggest. Not all of those jobs owe their existence to AI—grid upgrades and other factory building matters too. [We also] tracked employment in professional occupations closest to the AI boom—engineers, software developers, mathematicians and data scientists—and compared their growth since 2022 with professional employment overall. These roles have added roughly 730,000 jobs above trend in recent years. AI will not have created every single one of them. But it has almost certainly created quite a few.

Takeaways by Macro Roundup® AI

  1. AI-linked demand has generated roughly 730,000 above-trend jobs in engineering, software development, and data science since 2022, substantially outpacing near-term displacement effects.
  2. Data-centre construction has added approximately 320,000 above-trend jobs across electrical contracting and equipment manufacturing since 2023, with grid upgrades and broader factory-building contributing alongside AI demand.

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  • The College Wage Premium in the Generative AI Era — S. 575 between 2022 and 2026, the first sustained decline in relative demand for college-educated labor in four decades. AI exposure in white-collar occupations accounts for roughly 28% of that drop, as wage growth slowed disproportionately in high-AI-exposure jobs where college graduates are concentrated.
  • Canaries in the Coal Mine? Six Facts about the Recent Employment Effects of Artificial Intelligence — Young workers in the most AI-exposed occupations face an employment shortfall ~19% below less-exposed peers, driven by reduced hiring rather than job losses, and concentrated in roles where AI replaces rather than complements human tasks.
  • Looking for the Ladder — The downtick in hiring in AI-exposed occupations started 6 months prior to the release of ChatGPT, and is “perfectly” aligned with the start of Fed rate hikes…

AI Summary. S. facilities, targeting 10,000 units annually by 2028 at mid-six-figure euro prices — a fraction of the $4m–$6m cost of comparable Tomahawk missiles. Lower unit cost enables large-scale barrages to saturate hardened targets such as weapons factories and military bases.

Laura Pitel Financial Times
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Covenant, a defense start-up, is opening manufacturing facilities in the US, Germany, and Israel to manufacture its new deep-strike munition at scale, with a production target of 5,000 annually at its US and German sites in 2028.

Can cheaper missiles enable more effective saturation attacks on hardened targets?

Core argument: Covenant’s Anthem missile, priced in the mid-six-figure euro range, costs roughly 10–25x less than a Tomahawk ($4mn–$6mn), enabling saturation-barrage tactics that offset its smaller 250kg warhead through sheer volume.

Covenant aims to produce 1,000 Anthem missiles a year at each of its German and US plants in 2027, and 5,000 a year at each site from 2028. [Anthem] would cost in the “mid six-figure” euros — a fraction of the price of Tomahawks, which are sold to overseas governments for roughly $4mn-$6mn apiece. Covenant declined to state the range of the Anthem but [Covenant's CEO] said the concept was partly a response to a German-British plan to jointly develop “deep precision strike” weapons with a range of more than 2,000km. Anthem will carry a warhead weighing up to 250kg half the 450kg payload of a Tomahawk. But Covenant said the lower cost and ability to be produced at scale would allow militaries to fire large barrages of the missiles to “saturate” targets such as weapons factories or military bases.

Takeaways by Macro Roundup® AI

  1. Covenant’s Anthem missile, priced in the mid-six-figure euro range, costs roughly 10–25x less than a Tomahawk ($4mn–$6mn), enabling saturation-barrage tactics that offset its smaller 250kg warhead through sheer volume.
  2. Covenant targets production of 1,000 Anthem missiles per year at each of its German and U.S. plants by 2027, scaling to 5,000 per site annually by 2028, with €130mn in orders already booked.

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